DEBT |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Text Block] |
Opus Bank On September 2, 2015, the Company entered into a credit agreement with Opus Bank. Opus Bank committed to extend a credit facility totaling $10 million to the Company, inclusive of the following: (1) a $4 million term loan; (2) a $2 million revolving line of credit: and (3) additional term loan, totaling $4 million that would be issued upon meeting certain conditions. The $4 million term loan and $2 million revolving line of credit was granted at closing. During November 2015, $2 million of the additional $4 million term loan was granted.
The Company’s obligations to Opus Bank are secured by substantially all of the Company’s domestic assets and 65% of the shares in its Pakistan subsidiary.
The interest rate on all of the Opus Bank borrowings is the higher of (a) the prime rate plus 1.75% and (b) 5.0%. The commitment fee on the unused revolving line of credit is 0.5% per annum. The term loans will mature on September 1, 2019, and the revolving line of credit will terminate on September 1, 2018, unless extended. As of December 31, 2015, $6 million of term loans and the line of credit have been fully utilized, and $2 million is available to be issued based on the satisfaction of the covenants at year-end. Beginning October 1, 2016 the term loans require monthly principal payments of $166,667 through the end of the loan period. The Opus Bank credit agreement contains various covenants and conditions governing the long term debt and the revolving line of credit. As of December 31, 2015, the Company was in compliance with all the covenants contained in the Opus Bank credit agreement. In connection with the Opus Bank debt, the Company paid $100,000 of fees and issued warrants for Opus Bank to purchase 100,000 shares of its common stock. The warrants have a strike price equal to $5.00 per share, a seven year exercise window, piggyback registration and net exercise rights. The fees paid and warrants issued to Opus Bank were recorded as a debt discount. The warrants were classified as equity instruments and are included in additional paid-in capital in the consolidated balance sheet as of December 31, 2015. The Company used a Black Scholes option pricing model to determine the fair value of the warrants and allocated the warrants to the $4.0 million of the initial term loan proceeds based on the relative fair values. Of this amount, $104,000 was allocated to the warrants. Additionally, in the third quarter of 2015 the Company elected to early adopt ASU 2015-03, the new debt issuance costs guidance issued in April 2015. This accounting standard requires that debt issuance costs related to a recognized debt liability be recorded in the balance sheet as a direct deduction from the debt liability rather than as an asset, which was the Company’s previous accounting policy. Since the Company had no prior debt issuance costs, it elected to early adopt of ASU 2015-03 so that a retrospective adjustment would not be required when ASU 2015-03 becomes effective. Total debt issuance costs were $510,000 and recorded as an offset to the face amount of the loan. Discounts from the face amount of the loan are amortized over 4 years using the effective interest rate method. As a result of the loan discounts, the effective interest rate on the borrowings from Opus Bank as of December 31, 2015 is approximately 8%.
The long term debt at December 31, 2015 is recorded at its accredited value and consists of the following:
TD Bank Revolving Line of Credit As of December 31, 2014, the Company had an agreement with TD Bank for a revolving line of credit maturing on November 30, 2015 for up to $1,215,000. During March 2015, this line was increased to $3 million under the same lending terms. The line of credit had a variable rate of interest per annum at the Wall Street Journal prime rate plus 1% (4.25% as of December 31, 2014). The line of credit was collateralized by all of the Company’s assets and was guaranteed by the CEO of the Company. The Company fully repaid the TD Bank line of credit, from the Opus loan proceeds which had a balance of $3 million on September 2, 2015. The TD Bank line has been closed. The outstanding balance as of December 31, 2014 was $1,215,000. At December 31, 2014, the Company was not in compliance with a covenant required under the revolving line of credit to maintain a specified debt service ratio, which was waived by TD Bank.
Santander Bank (formerly Sovereign Bank) Loan Agreement The Company had a term loan, originally established to provide the Company revolving advances up to $100,000, with an interest rate of 7.74% per annum. The term loan was repaid during the year ended December 31, 2014.
Convertible Note On September 23, 2013, the Company issued a convertible promissory note in the amount of $500,000 to an accredited investor, AAMD LLC, with a maturity date of March 23, 2016, and bearing interest at the rate of 7.0% per annum. Pursuant to the terms of the note, the principal and interest outstanding thereunder automatically converted in to 117,567 shares of common stock upon the closing of the IPO at a conversion price equal to 90% of the per-share issuance price of the common stock in the IPO. This conversion resulted in additional common stock and paid-in capital amounts of $118 and $587,717, respectively, at the conversion date. Interest and other expense of $77,263 was recorded in connection with this convertible note for the year ended December 31, 2014, respectively, and are included in interest expense and other income (expense)-net in the consolidated statement of operations.
Vehicle Financing Notes The Company financed certain vehicle purchases both in the United States and in Pakistan. The vehicle financing notes have 3 to 5 year terms and were issued at current market rates.
Bank Direct Capital Finance The Company financed certain insurance purchases over the term of the policy life. The interest rate charged is 6.6%.
Obligation for customer relationships During November 2015, the Company purchased the customer relationship from a medical billing company for $435,000. At closing, $60,000 was paid and balance will be paid without interest in three equal installments during 2016.
Maturities of the outstanding notes payable, the term loan and other obligations as of December 31, 2015 are as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||